To elucidate the functional role of Dlx3, a targeted deletion of the gene was performed and the analysis of the phenotype. Targeted deletion of Dlx3 results in embryonic developmental arrest around day 9.5-10, associated with a gross failure of the placenta to undergo proper morphogenesis. It was not possible to assess the effects of Dlx3 loss of function on epidermal differentiation, since embryonic death occurs significantly earlier than the onset of epidermal stratification (E15.5). We are currently in the process of performing conditional ablation of Dlx3 to be able to specifically assess the role of this homeodomain transcription factor in epidermal stratification. Identification and characterization of novel epidermal- and differentiation-specific genes were performed in the laboratory. By the Subtractive Suppressive Hybridization (SSH) technique, a novel gene termed Suprabasin, was identified in mouse and human differentiating keratinocytes. During embryonic mouse development, Suprabasin mRNA was detected at day 15.5, coinciding with epidermal stratification. Suprabasin was detected in the suprabasal layers of the epithelia in the tongue, stomach and epidermis. The 2.2 Kb cDNA transcript encodes a protein of 72 kDa with a predicted PI of 6.85. The translated sequence has an amino terminal domain, a central domain composed of repeats rich in glycine and alanine, and a carboxy terminal domain. The alternatively spliced 0.7 Kb transcript encodes a smaller protein that shares the N- and C-terminus regions but lacks the repeat domain region. Cross-linking experiments indicate that Suprabasin is a substrate for TGase2 and TGase3 activity. Altogether, these results indicate that the Suprabasin protein potentially plays a role in the process of epidermal differentiation. Performing a Suppressive Subtractive Hybridization (SSH) screen we also obtained a partial cDNA clone we termed Scarf, which has homology to CaM-like proteins. Using a 5? RACE protocol and a gene-specific oligonucleotide, we obtained the full-length B12 cDNA. The ORF encodes a protein of 148 amino acid residues with a PI of 4.59, predicted MW of 16.8 kDa and contains four conserved EF-hand motifs, predicted to be Ca++-binding domains. The Ca++ signaling dependent systems, such as keratinocyte differentiation process, must be finely tuned for rapid and effective response to transient variations in Ca++ concentration. A central role in the transduction of Ca++ signals is played by members of the Ca++-binding proteins. The functionality of the EF-hand motifs may contribute to specificity in the interaction with the target molecules. Thus, it is through the binding of Ca++ by the EF-motifs that these proteins are able to bind or liberate its target interacting proteins and in this way modulate their function. The deduced amino acid sequence of Scarf had 56% homology with mouse CaM. Northern blot and in situ hybridization analysis showed restricted differential expression of the Scarf gene in the suprabasal layers of the epidermis. Furthermore, induction of expression was observed upon in vitro differentiation by Ca++ of primary cultured keratinocytes. The functionality of Scarf EF-hand domains was assayed with a radioactive Ca++-binding method, determining that the Scarf EF-hand motifs are functional Ca++-binding domains. Ca++-binding proteins and CaM exert their role through specific interaction with their target proteins. To identify Scarf target protein we are performing a yeast II hybrid screen. Identification of target proteins will help us understand the specific role of Scarf during keratinocyte differentiation.